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01/04/2010

The Revolution in the Economic Empowerment of Women-Becker

The current issue of the Economist recognizes that the
dramatic change in labor force participation of women is one of the most
important transformations in the economic and social worlds during the past
generation. I will discuss the main forces behind this change, and also
consider whether the United States needs additional public policies to
accommodate women at work.

Several crucial changes have contributed to transforming the
position of women. Perhaps the most fundamental during the past half century
were technological advances, such as the computer, and the shift in richer
countries away from manufacturing and toward services. These developments put
much greater emphasis on knowledge and information as opposed to physical
strength and heavy work, which in turn greatly increased the importance of
higher education.

Women have shown a greater capacity than men in completing
universities and four-year colleges, largely because women have greater and
less variable non-cognitive skills, such as study habits. While the fraction of
men with four-year college degrees in the United States has stagnated since
1970, the fraction of women with these degrees has exploded, so that now women
receive almost 60% of the four-year degrees in the United States compared to
only 40% in 1970. Similar shifts in higher education toward women have taken
place in European countries. Related trends are occurring also in developing
countries, even in fundamentalist Iran.

The increased importance of skills and knowledge has greatly
affected parental fertility and investment decision. As parents have recognized
the importance of a good education and other training to succeed in the modern
world, they have opted for fewer children since giving extensive education to
many children would be too expensive. Therefore, modern parents have lower
birth rates than parents did in the past, and instead invest much more in each
child. This has produced sharply declining birth rates almost everywhere, and
below replacement fertility rates in about 90 countries that include all
European nations, much of Asia, including China, Japan, and South Korea, and
even a few mainly Moslem nations.

The declines in fertility and shift toward greater
investment in children have been accelerated by the growing education of women,
who tend to be particularly concerned about providing a good education to their
children. This helps explain why educated women have relatively few children
and invest more in the schooling of each child. In addition, the time spent by
educated mothers in child rearing is more expensive since they can earn more in
the labor force. This too helps explain why women who graduate from college
have always tended to have fewer children than other women did.

These trends toward greater emphasis on knowledge and
information, low fertility, and much greater education of women, have all
contributed to the large growth in the labor force participation of women
during the past several decades. For example, about 80% of American women with
a college education are in the labor force compared to less than 50% for female
high school dropouts. Although women are more likely to work part time than
men, the gap in their labor force participation rates has greatly narrowed.

The recession affected men much harder than women since men
are more likely to work in construction and manufacturing, two sectors
especially hit hard. As a result, in recent months women have made
up about half the labor force in the United States. This fraction will fall as
the economy recovers, but the trend is still strongly toward gender equality in
labor force participation, and perhaps even toward a majority of participants
being women. This is partly because low skilled men have been withdrawing from
the labor force.

Although women still lag by a lot in their representation in
the top managerial positions, they have greatly narrowed the gap between their
full time earnings and that of men. Wives earn more than their husbands in perhaps 30% of all American families
with two earners, and that percentage
continues to grow. American women are starting new businesses at a much faster
rate than they did in the past, and the number of female heads of large
companies, although small in number, has been growing.

Although the United States has instituted various policies
to help working women, unlike Sweden and other Scandinavian countries it does
not provide extensive public subsidies to childcare, does not have a system of
legislated paid leaves to women that allow them to care for newborn children,
and does not guarantee that they can get their jobs back when they return to
work. Yet, contrary to many claims, I believe that the less interventionist
American approach may not have impeded, and may even have encouraged, women’s’
progress in the labor force.

Despite all the subsidies to childcare in Scandinavian
countries, the US still has higher fertility rates than Sweden, Norway, or
Denmark, and also than other European countries. Moreover, the labor force
participation rates of women in the US are not much below those in Scandinavian
countries, especially after considering that American birth rates are higher,
and that some women in Scandinavian countries are counted as having jobs even
when they are on paid child care leaves.

Married women in the United States with at least a high
school education can “afford” to pay for childcare, and forego employment for
months or even years after having children, since they are usually married to
husbands who have decent to high earnings. Many of these women do leave work
for a while to care for their children, even when that means they reduce their
opportunities to advance when they return to work. I do not believe there is
much of a case for the government to pay these married women to take leaves
from work when they have children, or guarantee them their jobs when they
return to work. Government policies should be rather neutral about whether
women leave work to care for children or continue to work.

On the other hand, public policies to help children of
poorer women, including children of many unmarried women, may be justified since
these women tend to under invest in their children because they have limited
incomes and often low education levels. Childcare assistance and other subsidies
to investments in the young children of these women could well have a high social
return. The US does subsidize childcare programs for low-income families, and
could increase the subsidies to various head start programs.

But such interventions would not justify the Scandinavian
approach of generously subsidizing all women, including well off women, to take
paid leaves when they have children. Despite all their job guarantees after
they return to work from childcare leaves, private sector opportunities for
Scandinavian women, and women in several other European countries, are limited.
For example, about three-quarters of employed women in Sweden work for the
government compared to one-quarter of employed men, and women comprise a much
larger fraction of senior managers of American companies than of Swedish companies.

Comments

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The percentage of women over men earning college degrees is even greater for African Americans than it is for Anglos. Won't such a dramatic improvement in female graduation numbers eventually result in much higher education levels for the entire African American demographic, as those well-educated women begin to devote ever greater amounts of time to the education of their young?

I think you should probe the fertility rate of Scandanavia vs US more. Could it be that the all in cost of raising a child in Scandanavian countries is far higher, with the highly subsidized, highly taxed, highly socialized society that they have?

That could account for the lower birthrate since the opportunity cost for having a child is far greater.

Er, more likely it's that as countries become developed countries their birthrates go down. Scandanavia functions as a developed country for a far greater percentage of it's population, so it's birthrate should be expected to be lower. The cost of having a child there is actually much lower, but people have their act together more so they avoid unwanted children. Our teenage pregnancy rates are like 5X theirs, and our child poverty rates are like 2x theirs. Get a couple of stats like that in the mix and pretty soon you have a higher birthrate.

It is interesting how European and American policymakers are impressed by the Scandinavian approach to subsidizing childcare and paid maternity leave, including generous government support of job safety when women return to work. There has been an extensive critique of unemployment definition in Sweden since many women on childcare and maternity leave are not classified as unemployed considering particular statistical criteria of unemployment.

The difference between the US and Scandinavian approach should not be biased. Why? Because the US labor market is far less regulated than the Swedish one. Greater flexibility in employment contracts and overall labor market structure does not hinge job opportunities. In Sweden and other Nordic nations, extensive government interference in labor market structure led to the situation in which the progress of women after giving birth, childcare and maternity leave has become limited. That is mostly because extensive childcare subsidies increase the opportunity cost of women's career prospects. Thus, childcare subsidies boost the "substitution effect" by encouraging women to spent more time on childcare than on career prospects. And if such policies endure for years, women's expectations about life-time investment in education and career are partly pre-determined, loosing the substantial amount of tet present value of the education investment.

I would agree that extensive and interventionist public policy towards childcare subsidies is not a real solution for further encouraging of women on their career and family prospects. Of course, the subsidies to women with low incomes make economic sense. However the design of subsidy system should rely on "incentives-matter" scheme to prevent adverse selection and moral hazard.

The empirical evidence suggests that Nordic countries enjoy the highest share of women with tertiary education. However, the share is still lower than in the U.S and there's a far higher percentage of American women on top executive position than in Nordic countries. I believe, this pattern can be explain by greater employment flexibility, lower tax burden and lower overall government spending - of which all encourage a well-attained combination of childcare and career prospects.

A recent study by the American Institutes for Research ("AIR") contains what should be unsettling news. The study, funded by the Pew Charitable Trusts, surveyed the literacy skills of graduates of four-year colleges and two-year community and junior colleges.

The ability of the students to analyze newspaper stories, comprehend documents and balance a checkbook was assessed. Over half the graduates of four-year colleges and three-quarters of the graduates of junior and community colleges could not be categorized as possessing these "proficient" skills.

Assumming that there is validity to these findings, it would be interesting to compare men with women. Does this say that women are
"empowered" but sitll poorly "educated"

It's pretty difficult and risky to make sweeping comparisons of two very different societies.

For example in Scandi, the UK and most of Europe school funding is a national obligation so schools tend to be equitably funded whereas in the US they are inequitably funded both from state to state and within the states. TX, MO, NY and others have used every possible court process to delay the mandates now in place to force funding both equitable and adequate.

"WE" seem to reap what we sow, with TX ranking 45th worst in the nation on SAT scores and THAT is after a 30% HS drop out rate and cherry picking only 60% of the student body who take the SAT test.

The point being that a prospective employee having graduated from HS in the US is a poor indicator of his readiness for employment. While the best HS grads, and I know several, would be better prepared than the average holder of a BA, others would be barely literate with few math skills and no background in science.

Thus........ as we see in a quick perusal of the employment ads, the US uses a BA or BS as, hopefully!!! an indication of literacy and the attention span to get through school, perhaps combined with the maturity of a 25 year old.

My guess is that the more uniform educational inputs of Scandi and Europe produce a more uniform graduate with the employer being more confident that the HS skills will meet his needs.

Further, I find all the talk about job flexibility in the US something than is, or may be true for those in the upper third of incomes where they have something of a "franchise" with which to bargain, basically college grads or the very skilled guild members. It's certainly not true for our "rust belt" or much of the rest of our economy.

Jeff, ya did kinda miss it on fertility rates, as having kids in the US is far more burdensome for the parents on a per child basis than in a nation that is more cooperative with the process and hardships of bringing up the next generation. I think others have pointed out that for upper-middle income folk be it the US, Scandi or Europe that they are not keeping up with reproducing themselves. In the US the diff is more than made up for by "blacks" Hispanics, and immigration.

It's a wonder, explainable only by biological urges, a partially blind optimism and the cultures of some, that anyone of median or below income in the US take on the daunting task of raising kids and trying to pay child care while eking out barely more than it costs for a "2nd income" and dealing with "insurances" and our dysfunctional H/C system.

I think there are quite a few good points raised in favor of not following the scandanavian system of subsidising women to take paid leave.

However, I think one of the most important points is that it gives the wrong incentives to employers. Employers may preemptively not hire women because they may have to give them paid leave to care for their children and guarantee that they can get their jobs back when they return to work.

Iris, let's think this through a bit! How do couples want to live during the time of a newcomer to our society? Take a couple days off and back to the mill? If reasonable time off for such an event is seen as lopsided and too costly for the employer let's even it up with family time for the father as well. The Scandi's and others are simply ahead of the US even though they too may have a few problems.

"Too much for industry to pay?" Take a look at the second graph down showing how the "rising tide" of a doubling of productivity over the last 30 years has lifted only the yachts of the topmost "earners" while CEO "compensation" has soared from an already high (compared to other nations) 60 times working folk pay to over 500 times today and that doesn't come close to describing the gleanings of our Wall Street Ponzi schemers!

http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/

In the short run small biz may not be able to pay increased leave time, but one thing that will be necessary if we are to get our economy back on track is better pay for median and lower income folk and ESPECIALLY those working at a min wage that has been, negligently, allowed to fall behind the inflation rate, much less benefit from the doubling of productivity.

IF, we can't find a means to get working folks wages up to where they should be, then I'd suggest increasing tax rates at the topmost tiers and have the Feds subsidize the maternity leave.

I'm not entirely certain of the accuracy of the statement that "there's a far higher percentage of American women on top executive position than in Nordic countries". I found official statistics from sweden on the fraction of female senior managers in public companies, which was 28% (down from 34% in 2004), what is the fraction in the US? The number of woman on the board of public companies was 20%. Another statistics I found was that the fraction of woman in the swedish parliament was 47%.

Furthermore, the paid leave that parents are allowed to take after their child's birth are shared between both the father and the mother. The current number of woman on paid child leave is only 56%. Since this is just a extra leave from which the person will return within a specified number of days I don't see why the person should be accounted for as unemployed?

Finally I also wonder if the share of woman with tertiary education is really lower than in the US? I could not find any statistics for this, but I did find one that stated that about 50% of all woman go on to university.

It strikes me as odd and interesting than an article on the "economic empowerment of women" overlooks more than half of women, who live in developing countries. Women have long participated in the labor force in these countries, and very actively so if you think about both formal and informal labor markets and self-employment.

Microfinance, for example, has long recognized women's contribution, and helped leverage it to improve living conditions of poor households (including children) and to empower women vis-a-vis their husband and communities. Granted, the impacts of microfinance are not what they were sometimes promised (http://www.dartmouth.edu/~jzinman/Papers/expandingaccess_manila_jan2010.pdf and http://www.povertyactionlab.org/papers/101_Duflo_Microfinance_Miracle.pdf for example), but it's undeniable that microfinance services are extremely valued by poor women. More research is being conducted on that topic, notably at J-PAL (MIT) and at the Financial Access Initiative (http://financialaccess.org).

Won't such a dramatic improvement in female graduation numbers eventually result in much higher education levels for the entire African American demographic, as those well-educated women begin to devote ever greater amounts of time to the education of their young

women are capable of reaching too far and do many things!! We are fully independent and already the cliche that we need a man to be economically bn is being left behind! ourselves we can survive alone! are very capable! success girls!

Well worth to read this article, thanks for sharing this information. With this article you offered me got a chance to know about this, anyway i say Great Article! and waiting for you next article about this interesting subject.

A recent study by the American Institutes for Research ("AIR") contains what should be unsettling news. The study, funded by the Pew Charitable Trusts, surveyed the literacy skills of graduates of four-year colleges and two-year community and junior colleges.

The ability of the students to analyze newspaper stories, comprehend documents and balance a checkbook was assessed. Over half the graduates of four-year colleges and three-quarters of the graduates of junior and community colleges could not be categorized as possessing these "proficient" skills.

Assumming that there is validity to these findings, it would be interesting to compare men with women. Does this say that women are
"empowered" but sitll poorly "educated"

What if greater participation of women in the workforce is not beneficial to society as a whole? What if the forces that drive greater participation of women in the workforce are actually a problem?

All manner of social problems are on the rise according to researchers; increased number of children in foster care, increasing divorce rate, increased youth runaways and homelessness, increasing substance abuse by teenagers and the list goes on. How much of this has been caused by lack of mom at home, too tired to effectively deal with the child's problems after a hard day at the office? Too busy earning money?

I don't think people go to work for the challenge or the fun of it. People go to work to earn money and sure, if they can manage to achieve greater job satisfaction it makes the idea of a job more palatable. But the bottom line is we are seeing more women in the workplace because they have to. According to a study in UK, 70% of working moms feel guilty when they leave their children in care and around the same number are unsatisfied with the care their children receive. Obviously these women are not voluntarily going to work.

I believe increased participation of women in the workforce is a sign of deep-seated economic problems not increased liberation.